PolicyMe Life Insurance

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Life insurance is a financial safety net for your loved ones in the event of your passing. Think of life insurance as a contract between you and your insurance company. You pay a premium to maintain your coverage and when you die, your insurer pays out your policy to your beneficiaries. This payment is known as a death benefit.
Protect your family from financial instability with the security of a life insurance policy designed to settle your debts, pay for funeral costs, set up an inheritance or even help with medical expenses if you’re unable to care for yourself. That way, your friends and family can focus on healing after loss and celebrating your life.
The death benefit is paid out when you die. It’s typically paid out in a lump sum — but you can instruct your insurer to pay the death benefit in installments or annuities.
Your beneficiaries can then use the money however they wish. These are some of the most common ways people spend the cash:
No. Fortunately, the death benefit isn’t considered part of the beneficiary’s taxable income. However, if the policy had an investment component that generated interest, the estate (not the beneficiary) might be subject to income tax. By the time the beneficiary receives the death benefit, income tax has already been covered by the deceased’s estate.
Maybe. There are 2 ways you can tap into your policy while you’re still alive:
Some insurers offer living benefits riders, which pay out your policy early in certain circumstances. These include:
More on this in a minute, but these policies accumulate cash value over time. Once you’ve built up enough cash value, you can begin to borrow against your policy.
Life insurance plans are lumped into 4 main categories: term, permanent, no-medical exam and group life policies.
Provides protection for a set period of time, like 10, 15 or 20 years.
A life insurance policy and investment product rolled into one, these policies offer lifelong coverage and accumulate cash value over time. When you pay your premium, a portion will go towards the cash value of your policy, which earns interest as it grows.
If you don’t want to take a medical exam for whatever reason, these are your policy options.
A type of term life insurance offered through the workplace as part of employee benefits.
But that’s not all: There are other niche types of coverage, like joint life insurance insurance and mortgage life insurance.
Here’s the golden rule. If you have loved ones who depend on you financially, you most likely need life insurance. Your policy can help to provide for them when you’re gone. These people have the greatest need for life insurance:
Get quotes from a range of insurers to find a policy that suits your budget and needs. Once you’ve settled on a policy, choose your coverage amount and select riders.
Provide personal, contact, employment and income details. You might have to fill out a health questionnaire or take a medical exam too.
Your insurer will charge a monthly or annual premium to keep your policy active. Try to make timely payments to avoid a policy lapse.
While rates can vary wildly, the average cost for life insurance is less than $50 a month. For example, a 20-year term life insurance policy worth $100,000 for a male non-smoker between the ages of 30 and 40, assuming he’s in relatively good health, would average around $18-$26 a month.
Your rate depends on a range of factors, like your age, gender, health, occupation, lifestyle and whether you’re a smoker. The coverage amount, term length and type of policy you’re applying for come into play, too. Insurers weigh these factors differently, which is why it’s important to compare quotes from multiple companies.
There’s a little bit of life admin involved in buying and maintaining a life insurance policy. Here’s what you need to know.
Most people name their spouse or children as their beneficiaries, but you don’t have to. You can choose another family member, friend, business partner, charitable organization or a legal entity — like an estate or trust. Things can get a little complicated if you want to elect a minor.
You may name multiple beneficiaries, and indicate which percentage of the death benefit should go to each. You can usually update the list at any time.
You can cancel your life insurance whenever you want. But you’ll only receive a refund of any premiums you paid in these situations:
Start by deciding whether you want coverage for a certain period or the rest of your life. Term life covers you for a specified period of typically 5 to 30 years, with options to convert your policy to another term if you need. Whole life insurance is a type of permanent policy, with lifelong coverage and a cash value component plus dividends.
Easily the most practical and affordable life insurance option, term life insurance offers coverage for a predetermined period of time.
Whole life insurance provides lifelong coverage at a fixed rate, while building in cash value.
Universal life insurance offers both lifelong coverage and an investment component that tracks the major indexes.
This investment focused life insurance policy is for experienced investors looking to grow and use the cash value component of their policy later in life, tax deferred.
Joint life insurance is a single policy, term or whole, that aims to meet the needs of two people, usually married.
This type of insurance provides a necessary income should you become afflicted with a debilitating injury or illness and are unable to work.
Term life | Whole life | Universal life | Variable life | Variable universal life | |
---|---|---|---|---|---|
Length of term | 1 to 30 years | Life | Life | Life | Life |
Cost of premium | Level premiums | Level premiums | Premiums can vary | Level premiums | Premiums can vary |
Guaranteed death benefit | ![]() | ![]() | ![]() | ![]() | ![]() |
Guaranteed cash value | ![]() | ![]() | May be exhausted to pay premiums, safeguarded from risk | ![]() | ![]() |
How your money appreciates or depreciates | N/A | Set rate of interest | Variable rate of interest | Pooled accounts managed by investors | Pooled accounts managed by investors |
What you should know | You can’t lose coverage, and you receive no premium refund at the end of the term | Not as flexible as other life insurance options | Flexible policy options and premiums | High-priced policy with no or minimal cash appreciation | High-priced policy with no or minimal cash appreciation |
The death benefit is paid out when you die. Most life insurance providers pay out claims within 60 days, with most states allowing your insurer up to 30 days to investigate your claim, if necessary. It’s typically paid out in a lump sum — but you can instruct your insurer to pay the death benefit in installments or annuities.
Your beneficiaries can then use the money however they wish. These are some of the most common ways people spend the cash:
To find a comprehensive life insurance policy at the best rates, look into how coverage amounts affect your premiums, the flexibility of your policy options and additional riders or features specific to the providers you’re interested in.
To simplify the process of comparing different policies, ask yourself:
Given the general unpredictability of life, there’s no one universal answer for how much coverage you should buy. Experts will tell you to start with a multiple of your annual income — up to 10 times your salary. Generally, you want to determine an amount that will cover immediate and ongoing costs after you die, so that your family and other dependents can support their current way of life.
When determining how much coverage is enough to protect your family, consider your debts, living expenses and lifestyle. Also plan for how your loved ones will pay for your funeral, burial and related expenses.
Think about how much of your salary goes to pay down debt and how much you pay monthly or annually toward:
Think about the number of years you might need to cover your family’s living expenses and whether savings or assets can offset those costs after your death, including:
Factor into your life insurance coverage everyday and even irregular expenses, like:
At some point, your family may be able to rely on government benefits and other investments. But until then, think about:
To calculate your policy’s premiums, life insurance providers engage a complicated review of your age, health and lifestyle called underwriting. They often run these details through proprietary algorithms and analytical tools to determine the level of risk in taking you on as a policyholder.
How a life insurance provider rates you within each category varies, but most consider:
You have options when shopping for a life insurance policy. You’ll find brokers that work with a range of companies to help you find the best prices in their network on the coverage you need, but they may not offer the personalized service you’ll find with a direct agent.
Both broker and agents work on behalf of providers to sell you a life insurance policy. It all comes down weighing each against what you’re looking for.
Buying life insurance from a broker
Buying direct from an insurance provider
If you've casually or regularly smoked tobacco in the last 12 months, most insurers will classify you as a smoker. Some insurers are more lenient, and will allow a celebratory cigar once in a while without assigning you a smoking status.
First, contact your insurer immediately to explain your hardship and discuss next steps. You might be able to freeze premiums for a short time until you're back on your feet.
Agents are typically tied to one or more life insurance companies. They have expert knowledge of those insurers' products, and can help you to complete your application. On the other hand, a broker works for you. They assess your situation and find the best possible policy for your needs.
While group life insurance is a solid employee benefit, it's often capped at smaller amounts, like $100,000 — and this may leave you underinsured. Group policies aren't portable either, which means you'll lose your coverage if you change jobs.
As a stay-at-home parent, you probably do a lot of unpaid labor, like cooking, cleaning and chauffeuring the kids around. If you die, a life insurance policy can help your family hire someone else to take over those tasks.
It depends. If you have student loans, a mortgage or other debts, a life insurance policy can pay those outstanding balances. That way, your loved ones won't be saddled with your debt if you die prematurely. It's also a good idea to buy a policy if you want to cover the costs of your own funeral.
When the policyholder dies, it's up to you to file a claim. You'll need to fill out a claim form and submit a certified copy of the death certificate and any other supporting information to the insurance company. The insurer will then review the claim and pay out the policy once it's approved.
Katia Iervasi is a lead writer and spokesperson at NerdWallet and a former editor at Finder, specializing in insurance. Her writing and analysis on life, disability and health insurance has been featured in The Washington Post, Forbes, Yahoo, Entrepreneur, Best Company and FT Advisor. She holds a BA in communication from Australia's Griffith University.
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